Petroleum Exploration and Production Act

The purpose of this Act is to statutorily vest petroleum rights in the state (s. 4) and to require petroleum explorers and producers to acquire licenses for the purpose of exploration and/or production (section 13). This Act does not apply to mining of minerals, as defined by the Mining Act; minerals are covered under that Act. The Act applies to the seabed and subsurface of the continental shelf.

Exploration licenses give an explorer "the exclusive right to explore in the exploration area for petroleum and to carry on such operations and execute such works as are necessary for that purpose". The Minister for Petroleum Affairs can impose conditions on licensees (section 23). In addition, general conditions are imposed on all licensees under section 30, requiring licensees to submit an adequate programme of work for up to one year. Failure to comply with such a programme of work is a violation of the license conditions and can mean that the licensee is in default. If petroleum is discovered in the exploration area, licensees must notify the Commissioner for Petroleum Affairs and the Minister (§31). Licensees must then declare a "location' - the area in which it will investigate production possibilities (§33). The Minister may then notice the holder to investigate production possibilities in the location, including, among other things, "physical impact studies into possible effects on the environment". (§34(h)).

Development licenses may be acquired for production in the relevant locations (§35). Application for licenses must include detailed proposals by the applicant for the construction, establishment and operation of all facilities and services incidental to the recovery, processing, storage and transportation of petroleum from the proposed development area. (§36). The Minister may impose conditions on the licensees (§37).

Restrictions on holders of licenses are found in section 48, specifying that the license holder shall not exercise any of his rights under the license or under this Act:

1. without the written consent of the responsible Minister in respect of:
   1. any land dedicated or set apart for any public purpose (other than mining),
   2. any land dedicated as a place of burial,
   3. any land which is the site of or is within one hundred metres of any building, reservoir or dam owned by the Government,
   4. any land forming part of a licensed government aerodrome or of any Government landing ground, or which is within one thousand metres of the boundaries thereof or
   5. any reserved area, or any protected monument, declared under the Antiquities Act, 1964,
2. without the written consent of the lawful occupier thereof in respect of:
   1. any land which is occupied by a house or building,
   2. any land cleared or near cleared land for purpose of growing agricultural crops,
   3. any land from which during the year preceding, agricultural crops have been reaped, or any land forming part of an aerodrome,
   4. in respect of land in a national park, forest reserve, game reserve, range development and management area, or the Ngorongoro Conservation Area, except with the written consent of the relevant authority,
3. in any city, municipality, township, minor settlement or demarcated trading settlement, except with the consent of holders of surface rights and the responsible Minister or authority having control over the settlement.

The registered holder of a license has obligations to follow certain work practices, namely: the holder shall:

1. carry out all exploration and development operations in the exploration or development area in a proper, safe and workmanlike manner, and in accordance with good oilfield practices,
2. shall take all reasonable steps necessary to secure the safety, health, and welfare of persons engaged in those operations in or about the exploration or development area, and
3. shall act in accordance with regulations and with any directions given under section 63 and with any direction, restriction imposed or requirement made by an Inspector under this Act.

Specifically with reference to environment, a registered holder of a license shall:

1. control the flow and prevent the waste or escape in the exploration or development area of petroleum, gas (not being petroleum) or water
2. shall prevent the escape in the exploration or development area of any mixture of water or drilling fluid and petroleum or any other matter,
3. shall prevent the pollution of any water-well, spring, stream, river, lake, reservoir, estuary, harbour, or area of sea by escape of petroleum, salt, water, drilling fluid, chemical additive (not being petroleum), or any other waste product or effluent, and,
4. shall furnish to the Commissioner prior to the drilling of any well, a detailed report on the technique to be employed, an estimate of the time to be taken, the material to be used and the safety measures to be employed in the drilling of the well. (§58).

Failure to abide by the provisions of section 58 is an offense with a penalty of one hundred thousand shillings (§60).

Section 61 requires holders of licenses to maintain in good condition all structures, equipment and other property in the area subject to the license (§61). Reclamation of natural resources by the licensee may be required by the Minister where a license has been wholly or partly determined, canceled or has expired (§65). A person who is given a direction by the Minister under this section and who fails to comply within the period specified shall be guilty of an offense and liable on conviction to a fine of not more than 100,000 Tsh. (§65(3)). The Minister may also opt to take the required action and subject the licensee to all costs and expenses.

Part IV addresses surface rights where petroleum licenses have been issued. Certain rights are maintained by occupiers of land where petroleum licenses are issued (section 73). For example, generally, licensees must exercise rights reasonably, so as to affect as little as possible the interests of any lawful occupier of the land subject to the licence, consistent with proper conduct of operations pursuant to the license or instrument of consent. Also, lawful occupiers of land retain rights to graze stock, and cultivate, as long as such activities do not interfere with exploration or development operations in any such area (section 73). Licensees are prohibited from interfering with fishing or navigation rights, unless they have given prior notice in writing to the Commissioner of the expected nature and duration of such interference. Under section 74, the licensee can be required to pay compensation to the lawful occupier of any land to which the licensee has caused any disturbance. The Commissioner or an authorized officer is given power of entry for inspection and safety, including authority to take or remove for the purposes of analysis or testing or for use in evidence in connection against this Act, samples of petroleum, water or other substances from a well, and, with respect to the health and safety of persons employed by a registered holder of a license, or in connection with any of the operations, issue directions to and impose restrictions on the holder or any persons so employed. The commissioner may also order cessation of operations or corrections of safety violations. Finally, the Minister has power to make regulations regarding environmental concerns, including for the conserving, and preventing the waste of the natural resources, whether petroleum or otherwise, of the land to which this Act applies; the contour of the flow and the prevention of the escape of petroleum, water, gases (other than petroleum) or other noxious or deleterious matter; the prevention of escape of water or drilling fuid or the mixture of water or drilling fluid or any other matter; and safety standards and the health and safety of person employed in or in connection with the exploration for or the recovery or conveyance of petroleum (§94).